Lucid Motors is the most recent business to be compared to Tesla (NASDAQ: TSLA) as its debut as a public company is expected at the end of the second quarter. There will be many watching with heightened interest to see how this electric vehicle (EV) company compares to the likes of Tesla and the other EV makers in this rapidly growing space. But in the meantime, here are 3 top stocks that Lucid will need to contend with once it goes public via a SPAC merger.
This article was originally written by MyWallSt. Read more market-beating insights from the MyWallSt team here.
Jumping in with Tesla first makes sense, as this company is up there as one of the most popular companies for investors. Indeed, Tesla has a cult-like status, but it attracts its fair share of criticism as well, with many analysts declaring that it is grossly overvalued.
Despite its critics and the current global chip shortage, Tesla seems to just keep growing. In Q1, its sales figures were far ahead of analysts’ expectations. Its Q1 report showed 184,800 deliveries and the production of a further 180,338 cars. Tesla, it seems, could be on track to exceed 850,000 deliveries in 2021 alone.
However, after a fantastic performance in 2020, the EV maker is now struggling to maintain expectations. Tesla has already faced three different mass recalls, amounting to around 200,000 vehicles this year alone. Additionally, it is currently under investigation by the U.S. National Highway Traffic Safety Administration for its autopilot feature.
Although it faces increased competition, Tesla is still definitely the top dog in the lucrative EV world. Lucid Motors will have to prove itself on the public market before it can compete with the likes of this company.
NIO (NYSE: NIO) is an important company to remember when looking at competition within the EV space. NIO is a leader in the Chinese electric car market and it is growing at pace with its most recent quarter showing total deliveries of 20,000 units, representing 423% growth year-over-year (YoY).
Indeed, the Chinese market is heating up as the top three Chinese players all witnessed similar growth for the quarter. This is significant as it means that Tesla is beginning to lose market share in China and it opens up the possibility for other companies to enter the highly competitive and rapidly growing Chinese arena.
Unlike Tesla, NIO generates the majority of its revenue through vehicle sales — 93%, to be exact. Unfortunately, just like Tesla, as well as General Motors, Ford, and other EV-makers, the company has shown its weakness when it was affected by the semiconductor shortage and was forced to shut down production for five days in March. This could be an issue for all EV makers in the future as the global chip shortage continues.
This Chinese automotive company is serious competition for Lucid Motors, particularly in the Asian market, where it will likely receive Chinese government support, whilst Lucid Motors, as an American company, will not.
Nikola Motors will seem like a strange one to add to this list as the company fell hard out of public favor within a couple of months of going public. It is currently being investigated for fraud as despite being an automotive company, it has not delivered a single vehicle. Therefore, this company is a great example of what not to do.
The beleaguered car-maker has rid itself of its founder, who recently sold 3.9 million of his shares at the beginning of April — making $49 million in the process — and it can now begin to try and set things right. But, this will be a long hard road, where the company will need to prove that it can first and foremost produce a workable vehicle.
Lucid Motors, in particular, will need to learn from the fiasco of Nikola Motors, as it has not produced a car yet. Currently, it is still building its $700 million factory, where it will begin producing its first vehicle, Lucid Air, this spring. It plans to expand the factory and begin producing an all-electric SUV by 2023.
However, until it has a tangible product to sell, the company will need to move carefully and with transparency, lest investors get spooked believing this to be another fraudulent company with no prospects.
MyWallSt gives you access to over 100 market-beating stock picks and the research to back them up. Our analyst team posts daily insights, subscriber-only podcasts, and the headlines that move the market. Start your free trial now!
Disclaimer Past performance is not a reliable indicator of future results.
CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.
CMC Markets does not endorse or offer opinion on the trading strategies used by the author. Their trading strategies do not guarantee any return and CMC Markets shall not be held responsible for any loss that you may incur, either directly or indirectly, arising from any investment based on any information contained herein.
*Tax treatment depends on individual circumstances and can change or may differ in a jurisdiction other than the UK.